The Outlook for the Global Economy and World Trade

Transcription

1 The Outlook for the Global Economy and World Trade Capital Link Invest in International Shipping Forum 2014 Nick Kounis Head Macro Research New York, 20 March

2 Evaluating the risks from Crimea tensions Percentage of European gas demand met from RussiaRussia 25% Percentage of Russia s tax revenues that come from energy Russia 50% Percentage of Russia s export earnings that come from energy Russia 70% Source: ABN AMRO Group Economics 2

3 A string of disappointing US data recently ABN AMRO US Economic Surprise Index Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Source: Bloomberg, ABN AMRO Group Economics 3

4 Extreme weather most likely to blame 4

5 Impact of weather usually temporary Average during hurricanes (Andrew, Katrina & Sandy), 0 = month of impact ISM manufacturing Consumer Confidence (rhs) Source: ABN AMRO Group Economics, Thomson Reuters Datastream 5

6 DM private sector balance sheets back in health US assets minus liabilities % GDP, 100 = long-term average Companies Households Source: Thomson Reuters Datastream 6

7 DM fiscal consolidation is fading fast Budget cuts, % GDP H1 10 H2 H1 11 H2 H1 12 H2 H1 13 H2 H1 14 H2 Eurozone US Source: ABN AMRO Group Economics 7

8 Advanced economy capex lift - US US profits, % GDP Source: Thomson Reuters Datastream 8

9 Eurozone bank deleveraging Financial institution assets, % yoy Source: Thomson Reuters Datastream 9

10 Vicious circle in Europe has been broken Indebted governments Banks Markets Weakening economy Tighter financing conditions Budget cuts Rising bond yields Source: ABN AMRO Group Economics 10

11 Competitiveness adjustment in the eurozone Unit labour cost index, 2006 = GR SP PT EZ Source: Thomson Reuters Datastream 11

12 Advanced economy demand will boost EM % Asian exports to major destinations US EZ LA E Europe Source: Thomson Reuters Datastream 12

13 EM exports starting to move higher Index Emerging Asia CEE Latin America Emerging economies Source: Thomson Reuters Datastream 13

14 China s economy settling at a new growth trend GDP, % Q Q Q Q Q % qoq annualised % yoy Source: Thomson Reuters Datastream 14

15 China s great transformation from this 15

16 to this 16

17 Risks from excessive debt in China Total debt to GDP, % Consumer Central govt. Local govt. Companies Source: CICC, PBoC, ABN AMRO Group Economics

18 Corporate debt high compared to other large EMs Corporate debt to GDP, % Brazil Russia India China Source: CICC, PBoC, ABN AMRO Group Economics

19 China attempting to manage orderly deleveraging Total aggregate financing, 3M mav. % yoy Source: Thomson Reuters Datastream

20 China: key indicators point to resilience Electricity production, % yoy Source: Thomson Reuters Datastream

21 Examining risks from the Fed s exit Interest rate surge EM capital flight 21

22 Inflation is low giving central banks flexibility Headline consumer prices, % yoy US Eurozone Source: Thomson Reuters Datastream

23 Risk: large capital inflows to EM last few years $ bn FDI Equity portfolio inv Commercial banks Nonbank creditors Official flows Source: Thomson Reuters Datastream 23

24 EM currency weakness concentrated 5 Spot performance since December FOMC, % IDR CZK INR PLN THB SGD EM index BRL MXN KRW CNY TWD HUF ZAR CLP TRY RUB Source: Bloomberg, ABN AMRO Group Economics 24

25 Positive EM fundamentals: external balance % GDP Current account balance External indebtedness Source: IIF, ABN AMRO Group Economics 25

26 Positive EM fundamentals: FX reserves FX reserves to short-term external debt Emerging Asia CEE Latin America Source: IIF, ABN AMRO Group Economics 26

27 Our views in numbers economy and markets Economic outlook Global GDP US Eurozone China World trade Rates and FX Spot USD 3-M Libor rate US 10-Y Treasury yield EUR/USD Source: ABN AMRO Group Economics

28 Oil: rise in demand this year, but also supply Million barrels of oil per day Demand Supply Source: IEA, ABN AMRO Group Economics 28

29 Iron ore: structurally slower demand growth % yoy China real estate investment (lhs) Imports of iron ore (rhs) Source: Thomson Reuters Datastream 29

30 Our views in numbers - commodities Metals (USD/tonne) Spot 3M Steel (HRC) Iron Ore Coking Coal Energy ($) Spot 3M Brent oil WTI Natural Gas Source: ABN AMRO Group Economics

31 Important information Please go to for all our economics and markets research The views and opinions expressed in this document may be subject to change at any given time. Individuals are advised to seek professional guidance prior to making any investments. This material is provided to you for information purposes only and should not be construed as an advice nor as an invitation or offer to buy or sell securities or other financial instruments. Before investing in any product of ABN AMRO Bank N.V., you should obtain information on various financial and other risks and any possible restrictions that you and your investments activities may encounter under applicable laws and regulations. If, after reading the presentation, you consider investing in a product, you are advised to discuss such an investment with your relationship manager or personal advisor and check whether this product considering the risks involved- is appropriate within your investment activities. The value of your investments may fluctuate. Past performance is no guarantee for future returns. ABN AMRO Bank N.V. has taken all reasonable care to ensure that the information contained in this document is correct but does not accept liability for any misprints. ABN AMRO Bank N.V. reserves the right to make amendments to this material. 31